I'm attaching steps that I did after the lucid-image steps above with a
karmic image.

Note, that the karmic image has a ramdisk.  This didn't seem to change
anything, the karmic image fails to boot also.

** Attachment added: "karmic steps, showing same issue (done after lucid above)"
   http://launchpadlibrarian.net/40252256/karmic-after.txt

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instance stays in pending for > 1 hour, then to terminated
https://bugs.launchpad.net/bugs/532682
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